OSAKA -- A Japanese public-private investment fund is considering taking a direct stake in Sharp to help right the electronics group's listing operations.

     This would give the Innovation Network Corp. of Japan a more forward role in supporting Sharp than the manufacturer had previously considered. Sharp has explored the possibility of spinning off its struggling liquid crystal display business into a separate unit that would receive investment from either the INCJ or Apple and Taiwan's Hon Hai Precision Industry.

     Sharp and the INCJ have each retained advisers on a possible direct investment. They are to begin negotiating the terms of such a tie-up, including the size of the INCJ's stake. Tokyo Stock Exchange-listed Sharp had a market capitalization of roughly 230 billion yen ($1.91 billion) as of the close of trading Friday.

     The INCJ already ranks as the top shareholder in Japan Display, which competes with Sharp in LCDs, creating a potential stumbling block to a direct investment in the Osaka-based company.

     Japan's Ministry of Economy, Trade and Industry fears the loss of Sharp LCD technology to foreign rivals. METI, which oversees the INCJ, envisions the turnaround fund playing a broad role in reorganizing Sharp by seeking alliances in other business lines, including appliances, televisions and solar panels.

     One proposal would merge Sharp's LCD business with JOLED, a manufacturer of organic light-emitting diode panels that counts the INCJ and Japan Display as shareholders.

(Nikkei)